Merck to pay $671 million to settle claim

Drug company allegedly overcharged Medicaid programs since mid-1990s.

Merck and Co. has agreed to pay $671 million to settle claims that it overcharged Medicaid.

DANIEL HULSHIZER/THE ASSOCIATED PRESS

BY LINDA A. JOHNSONTHE ASSOCIATED PRESS

Published: Friday, February 8, 2008 at 6:30 a.m.

Last Modified: Thursday, February 7, 2008 at 10:39 p.m.

TRENTON, N.J. — Merck & Co. will pay $671 million to settle claims it overcharged government health programs for four popular drugs and gave doctors fees and gifts to induce them to prescribe its drugs, U.S. prosecutors and company officials said Thursday.
The alleged overcharges, dating back to the mid-1990s, involved Medicaid programs in all but one state and the District of Colombia, as well as federal health-insurance programs at agencies including the Public Health Service, Department of Defense and Veterans Administration.
A nationwide investigation by federal prosecutors, triggered partly by a former Merck salesman-turned-whistleblower and a Louisiana doctor who exposed part of the alleged overcharging, resulted in two settlements announced Thursday.
In Philadelphia, U.S. prosecutors said Merck agreed to pay $399 million plus interest for improper calculation of Medicaid rebates and its marketing practices.
And in New Orleans, the U.S. Attorney's office said the drugmaker agreed to pay $250 million plus interest for its rebate practices.
The interest payments boost the total payout to $671 million, Merck said.
The company said the settlements do not constitute an admission of any liability or wrongdoing.
Drug companies are required to report to the government the lowest price for their medicines. Prosecutors said Merck, however, was hiding the steep discounts it gave to hospitals that used a set amount of Merck products and was reporting higher prices to the government.

TRENTON, N.J.  Merck & Co. will pay $671 million to settle claims it overcharged government health programs for four popular drugs and gave doctors fees and gifts to induce them to prescribe its drugs, U.S. prosecutors and company officials said Thursday.<BR>
The alleged overcharges, dating back to the mid-1990s, involved Medicaid programs in all but one state and the District of Colombia, as well as federal health-insurance programs at agencies including the Public Health Service, Department of Defense and Veterans Administration.<BR>
A nationwide investigation by federal prosecutors, triggered partly by a former Merck salesman-turned-whistleblower and a Louisiana doctor who exposed part of the alleged overcharging, resulted in two settlements announced Thursday.<BR>
In Philadelphia, U.S. prosecutors said Merck agreed to pay $399 million plus interest for improper calculation of Medicaid rebates and its marketing practices.<BR>
And in New Orleans, the U.S. Attorney's office said the drugmaker agreed to pay $250 million plus interest for its rebate practices.<BR>
The interest payments boost the total payout to $671 million, Merck said.<BR>
The company said the settlements do not constitute an admission of any liability or wrongdoing.<BR>
Drug companies are required to report to the government the lowest price for their medicines. Prosecutors said Merck, however, was hiding the steep discounts it gave to hospitals that used a set amount of Merck products and was reporting higher prices to the government.<BR>